Yegiazaryan v. Smagin

STATUTORY INTERPRETATION OF RICO § 1964(c)

Yegiazaryan argues that § 1964(c) of RICO, under which individuals can sue for injuries caused by defendants’ alleged racketeering activities, does not permit lawsuits for injuries that occur outside the United States. Brief for Petitioners at 18. Moreover, Yegiazaryan asserts that, as a legal matter, an economic injury under this provision can only occur in the country in which the injured individual resides. Id. at 18–19. Therefore, according to Yegiazaryan, a plaintiff that resides abroad and never enters the United States can never experience an injury that falls under this provision. Id. To support this assertion, Yegiazaryan points out that the phrasing of § 1964(c) carefully describes potential plaintiffs as people who have been harmed through their economic interests, not merely the owners of injured economic entities or property. Id. at 19–21. Yegiazaryan contends that since this delineation is so closely tied to the person who is injured, rather than the economic interest itself, courts should only consider that individual’s country of residence in determining the location of the harm. Id. at 23.

Yegiazaryan also highlights the similar wording used in RICO and the antitrust statutes it was modeled after, which define and locate economic injury in a manner akin to the one he proposes for RICO. Id. at 23­–24. Yegiazaryan claims that this is evidence that Congress intended to take the same approach in both statutory contexts. Id. Yegiazaryan asserts that the legislative history of RICO supports this interpretation of § 1964(c), noting some senators’ comments in support of RICO’s passage that describe goals similar to those of the antitrust statutes. Id. at 27–28. Finally, Yegiazaryan argues that the Supreme Court should consider § 1964(c) in light of the common law principles that were in effect when Congress enacted RICO. Id. at 29. Yegiazaryan contends that these common law principles called for applying the law of the location in which an injury occurred when deciding subsequent litigation over it. Id. at 31. As an example, Yegiazaryan highlights one federal court decision issued shortly after RICO’s passage, in which the Second Circuit held that the injury in a fraud suit normally occurs where the plaintiff lives. Id. at 35.

Smagin counters that RICO’s text explicitly “permits ‘any person’ to sue’” under § 1964(c). Brief for Respondent, Vitaly Ivanovich Smagin et al. at 11. Smagin maintains that, in crafting the statute’s language so broadly, Congress intended to permit most plaintiffs to bring suit under RICO unless Congress specified otherwise in the statute. Id. at 11–12, 26. Smagin points out that Congress did not exclude foreign plaintiffs. Id. at 12. Given this clarity in the statute’s language, Smagin argues, the Supreme Court should not look to sources other than the statute to determine its meaning. Id. at 11. Smagin further counters that, when courts consider whether a statute applies beyond the United States, they consider whether the conduct at issue occurred in the United States, not whether the person engaged in the conduct lives there. Id. at 13–14. Likewise, Smagin notes that in both prior and currently pending cases, the Supreme Court has focused on the location of conduct, rather than parties, in analyzing statutory provisions’ reach abroad. Id. at 18–20.

Smagin adds that barring foreign plaintiffs from suing under § 1964(c) would contradict the Supreme Court’s statement in RJR Nabisco v. European Community that it did not intend to bar foreign plaintiffs from suing under RICO. Id. at 15. Smagin further argues that the prospective limit on RICO’s application abroad arises from judge-made methods of statutory interpretation, not the text of RICO itself, and that this judge-made limitation is inapplicable where the conduct at issue is not exclusively foreign. Id. at 26. Smagin disputes Yegiazaryan’s distinction between harms to individuals “in” and “to” their property, contending that such a distinction is nonexistent or otherwise irrelevant. Id. at 29. Lastly, Smagin claims that common law principles have limited relevance because the question of what conduct may be resolved by suing under RICO is unrelated to the state-level common law that guides choices of which state’s law applies in a dispute. Id. at 31. Even then, Smagin elaborates, these common law principles only provide that the location of the harmed individual is a factor to be considered alongside the location of the conduct itself. Id. at 31–32.

LOCATING AN INDIVIDUAL’S INJURED INTANGIBLE PROPERTY

Yegiazaryan alternatively argues that, even if the Supreme Court does not consider the injured individual’s residence as the location of an injury for the analysis under RICO, it should do so where the injury is to the individual’s intangible property. Brief for Petitioner at 40. Yegiazaryan notes that intangible property includes financial assets such as judgments, awards, and debts. Id. Yegiazaryan argues that since an injury to such an intangible asset affects the overall wealth of the owner, but not a discrete piece of property located in a physical place, the location of the injury must be the residence of the owner. Id. at 42, 44. Additionally, Yegiazaryan cites Pasquantino v. United States for the proposition that failure to pay a debt, the injury here, is an “economic injury” upon the individual who is owed the money. Id. at 42. Yegiazaryan also emphasizes the applicability of the the common law doctrine “mobilia sequuntur personam” or “movable things follow the person” to the intangible property at issue here. Id. at 44. Hence, Yegiazaryan concludes that Smagin’s alleged injury is to a debt that he has the benefit of collecting to increase his wealth as a Russian resident, so the injury is located with him. Id. at 42, 45.

To the contrary, Smagin argues that § 1964(c) should encompass the injury at issue here because of the injury’s several exclusive connections to California. Brief for Respondent at 21. Specifically, Smagin argues that his property is located in California because it is a judgment awarded by a California court only enforceable in California. Id. Smagin also argues that the racketeering conduct at issue, which Smagin maintains is the focus of RICO as opposed to the individual that perpetrated it, occurred in, and was directed from, California. Id. at 22. Smagin clarifies that the California judgment is distinct from the arbitration award and prior foreign judgment against Yegiazaryan and, thus, can only be enforced in California. Id. at 33–34. Smagin finally contends that any assignment of intangible property to a particular location is functionally a legal construct; thus, the analysis that determines where it should be assigned should vary based on the particular context of a statute rather than according to a bright-line rule like the one Yegiazaryan proposes. Id. at 35. Here, Smagin asserts that, because the California judgment has legal effect in California and not in Russia, the judgment should be treated as located in California despite Smagin’s residence in Russia. Id. at 35–36.